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Answers (4)
- SoCal_Engr
- Contributions:5666
If the housing market, and other segments of our economy, need to find a "natural bottom" to stabilize and move forward, then does it follow that any of the "collateral damage" (i.e., lost jobs, industries, etc.) also need to be allowed to happen?
In letting market segments "find bottom", does it matter that some of these segments are competing in a global economy with one hand (sometimes both?) tied behind their back? Living in California, I have seen businesses leave rather than put up with the nonsense/overhead of attempting to survive in CA's business environment.
I'm a strong believer in "leave it alone", but that assumes a level playing field. For many of the segments competing in the global market, I don't believe it is level - so then what?
In letting market segments "find bottom", does it matter that some of these segments are competing in a global economy with one hand (sometimes both?) tied behind their back? Living in California, I have seen businesses leave rather than put up with the nonsense/overhead of attempting to survive in CA's business environment.
I'm a strong believer in "leave it alone", but that assumes a level playing field. For many of the segments competing in the global market, I don't believe it is level - so then what?
- real estate mike
- Contributions:2001
The artificial bottom propped up by incentives was a temporary bandaid while waiting for the overall economy to recover. In agreement with Loretta that the focus should have been jobs and small business growth. Instead it seems very much so that the focus is playing with our money to ensure progressive globalism at the long term expense of America and that underperforming and outright corrupt individuals/contributors get to continue in their ways. But this is the system we have, so the question is what now? How to best perform as an individual in this system seems the logical next step...
- sunnyview
- Contributions:25139
I think it depends on the market. Real estate in many big cities has run more than 3x income for decades while the trend in the suburbs has been a fairly steady 2-3x income in most places outside of coastal communities. The market will not be healthy until the people buying houses can support them without ARM's using no more than 25-30% of their income. If the banks follow traditional lending standards, things should right themselves, but most folks don't want any more drops. In my opinion, the market has to find a sustainable level without incentives so we can move forward.
- Loretta Buckner, "RealWorldProperties"
- Contributions:205
I'd say a 'normal housing market' is one which is free of the artificial stimulation we saw when the regualtions on the mortgage market were removed. Stabilization takes time, however, especially after such a huge boost--but signs are definitely there that the market has begun to stabilize in some areas.
Pinellas County, Florida, for example--it's a finite area, bounded by water on three sides and in a large metropolitan area. I've begun to see some areas where there are more sales in the past 30-90 days than there is inventory--this is most definitely a sign of market stabilization.
Is this the case all around the country? Certainly not. Some areas will recover more quickly than others, and this will be due to the jobs in those areas--jobs, after all, drive the economy--not the housing market.
Pinellas County, Florida, for example--it's a finite area, bounded by water on three sides and in a large metropolitan area. I've begun to see some areas where there are more sales in the past 30-90 days than there is inventory--this is most definitely a sign of market stabilization.
Is this the case all around the country? Certainly not. Some areas will recover more quickly than others, and this will be due to the jobs in those areas--jobs, after all, drive the economy--not the housing market.
If the housing market is "trying to find bottom", how can any artificial "boost" be helpful?
If the market has been trending down, then any "boost" is just a temporary delay in "finding bottom". It makes more sense to let the market fall naturally, while trying to keep it from getting into a freefall that help it blow through the bottom.
With all the discussion about shadow inventory being held back by banks, how can anyone really believe that "bottom" may have been found? Close? Maybe. Bottom? Probably not.
What is "normal"? Certainly it can't be the market of the 2000's. Is it the market from the early '70's? Is it a market that conforms to the 3x-income parameter I've seen thrown out? What constitutes a "normal housing market"?
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